GEICO Pursues Restitution From Auto Thieves; New Law Aids Recovery of Deductibles, Other Expenses

CHEVY CHASE, Md., Nov. 17, 2005 -- "Some auto insurance companies may be satisfied with cutting a check to settle matters when a policyholder's vehicle is stolen, torched or vandalized. For GEICO, the case doesn't end there anymore," said Seth Ingall, GEICO's vice president of claims.

GEICO is aggressively using state criminal systems to go after people convicted of auto theft or auto damage so the court can order them to personally return lost deductibles and other expenses to GEICO policyholders.

Through GEICO's new CORTS program -- Court Ordered Restitution, Towing and Storage -- the company has gone after dozens of restitution cases, and the effort is paying off. Thousands of dollars have been returned to policyholders to pay back their deductibles and expenses.

Being present at the court hearings is a big part of the program's success.

Says Tom Gross, GEICO's coordinator for the CORTS program, "Sometimes we have to go to court repeatedly on the same case. Needless to say, our policyholders love us for appearing in court with them throughout the entire criminal proceedings."

It all began in April 2003 when GEICO's Suzanne Worthen, an assistant vice president, grew concerned about the excessive number of vehicle thefts in the Washington, D.C. metropolitan area. GEICO also spotted probable abuses in towing and storage charges in the region and identified the need for someone to monitor costs and regulations in different jurisdictions.

Enter GEICO's special investigations unit (SIU) specialist David McCamley who came up with the CORTS concept for a policyholder restitution program. Worthen then tapped Gross, a GEICO adjuster and former Prince George's County police officer, to coordinate the program. Today Gross is assisted by Mike Sutton from the SIU unit and both of them attend court hearings on behalf of policyholders.

Maryland law opens door

GEICO got involved when a recent change to Maryland law entitled insurers operating in the state to seek restitution on behalf of their policyholders through the criminal courts. Gross began examining instances of damage to policyholder vehicles caused by theft, vandalism, arson and DUIs. Any case where someone had been criminally arrested allowed GEICO to seek restitution through the courts.

The law went into effect in Maryland in 2003, and in 2004 GEICO took on well over 100 assigned restitution cases. During that time, Gross attended court 93 times throughout Maryland on behalf of GEICO policyholders.

Over the course of the year, GEICO paid out $428,154 on assigned claims and won back $103,432 in restitution in 42 cases, recovering the deductibles for GEICO policyholders in each case. GEICO's Payment Recovery Unit worked with the state agencies to enforce the court restitution orders so that the victims actually received the restitution dollars from the convicted defendants.

GEICO is experiencing similar results on cases related to excessive towing and storage bills.

Courts providing greater support

In the beginning, getting buy-in from the legal system was a bit of a challenge. Although from the start the program enjoyed support from local law enforcement in Prince George's County (Md.), Montgomery County (Md.) and Washington D.C., the courts initially did not view CORTS very favorably, in large part because existing criminal case loads were already heavy.

Many judges told Gross that the insurer should seek restitution through the civil court system -- even though the criminal statutes in Maryland specifically address insurers as a third party payer eligible for restitution once the primary victim was made whole again.

Because GEICO demands that policyholders are paid in full before the company receives restitution, the CORTS program started to gain credibility within the court system. The court relationship improved over the year as GEICO representatives regularly appeared in court with company policyholders until their cases were concluded. GEICO also provides the court with all documentation needed for the courts to prosecute the defendants to the fullest extent of the law.

Now GEICO is recognized as an active partner in the process.

The CORTS program in Maryland has been successful enough that GEICO launched it in Macon, Ga. earlier this year, and it is scheduled for rollout in Florida in the near future.

Gross also sees the CORTS program as a valuable crime deterrent. This year Washington, D.C. joined Maryland in passing a law making both parents and children responsible for up to $10,000 restitution per incident. "Even if they just have to pay $500 or so to pay back a deductible, it might make them think twice about committing a crime," Gross said. "The message we send is that there must be responsibility behind the bad decisions that people make."

A new challenge is interesting other insurance companies in the process. So far, GEICO is the only company seeking restitution through the criminal court system.

Getting more companies onboard "would be extremely beneficial to insureds everywhere," Gross said. "Insurers will pay all day long for accidents, but they shouldn't have to foot the bill for deliberate crimes."

GEICO (Government Employees Insurance Company) is the fourth largest private passenger auto insurer in the United States. It provides auto insurance coverage for more than 6 million policyholders and insures more than 10 million vehicles. GEICO is a member of the Berkshire Hathaway group of companies. GEICO provides consumers with sales, service and claims capabilities on its geico.com Web site. Consumers may also contact the company at its toll free 1-800-841-3000 number. For more information, go to http://www.geico.com/.